A new world order?
Socialist Outlook magazine1990sPhil HearseScanned print read by OCR, and not yet proofread: expect run-together words, dropped letters and, where a piece began partway down a page, a few lines of its neighbour. The printed page is the authority.
It is widely recognised that the crisis in the Soviet Union and Eastern Europe will have knock-on effects worldwide. But, says PHIL HEARSE, the crisis of Stalinism is just one more sign of the collapse of the world system which emerged from World War 2.
The long struggle of the twentieth century - what Lenin called the 'epoch of imperialism' - is building up into a crescendo of planet-wide economic and social change. The way in which this evolves will determine not only the immediate future of socialism, but whether socialism is an historic possibility.
The post-war history of capitalism falls into three main phases: the immediate post-war reconstruction, the long post-war boom starting in most countries in the early 1950s, and the prolonged crisis and spiral towards recession which has lasted since the late 1960s.
Already the post-war crisis has lasted twenty years, as long as the initial boom itself. In Marxist terms, this is a crisis of 'overproduction', a crisis of profitability. The uniqueness of the present world situation is that the elements are beginning to emerge of a radical solution to this crisis, which could set off a new wave of capitalist accumulation and economic boom. The key factors here would be the restoration of capitalism in Eastern Europe and the defeat of revolution in the third world, which in turn would create the preconditions for defeats of the working class in the advanced capitalist west. We will look at the different elements of the world crisis and finally discuss how they combine.
The 1980s 'upturn'
When Thatcher came to power in 1979 her government deliberately crashed the British economy, creating a massive deflationary recession. The aim of this deflation, which sent unemployment rocketing over the 3 million mark for the first time, was to 'shake out' and restructure British industry.
When Reagan was elected in 1980 everyone expected that he would do the same to the USA. But 'Reaganomics' turned into something very different, in some ways the very opposite. Through 'military Keynesianism', an enormous increase in the state financed military budget, Reagan turned the United States into a boom economy. Yuppies were born of Ronald Reagan, as the American middle class enjoyed a consumption bonanza.
But this boom was not the result of any dynamic surge of US manufacturing. In fact, compared with Germany and Japan, US manufacturing was declining. The consumption boom was supplied by imports and financed by credit. Thus the expansion created two unwanted effects: the United States was turned into the world's biggest debtor nation, as high interest rates sucked in foreign loans. And the government's own spending deficit mushroomed into the trillions.
The net result was to generate a surge in the economies of all the major capitalist countries. Thatcher's election victory in 1987 was not based solely on the defeat of the miners' strike, but on the fact that the British economy had been dragged out of recession by this US-led world mini-boom – and thus important sections of the middle class and even sections of the working class had seen their living standards hold up.
The signal for the coming end of the mini-boom, showing its ultimate unsustainability, was the November 1987 stock market crash. The crash revealed the overpricing of shares worldwide – the fact that boom was based on speculative borrowing and not a fundamental restoration of the rate of profit. Like all speculative booms, American military Keynesianism had staved off the crisis but only by creating bigger contradictions which would emerge at a later stage.
Now the world economy is heading into recession. That is the basic reason why Thatcher can't turn the British economy round in time for the next election. Only in the medium and long term is there any prospect of a new economic boom: and that requires not just the 'normal' workings of the world economy, but massive changes in world politics.
Debt crisis
The drift towards deeper crisis in the world capitalist economy has had its first and most dramatic effects in the 'third world'. The truly gigantic aspects of this crisis are often underestimated in the West. Since 1983, net capital transfers to the third world have been negative – in other words the poor are being forced to subsidise the rich countries. In 1977 the net outflow of capital from the imperialist powers to the less developed economies of the third world was $36.9bn: by 1986 it had exactly reversed with a net capital flow to the West of $74bn.
Huge outflows of loans to the less developed countries started when the banks were awash with 'petro-dollars' in the 1970s. But Reaganite deficit financing sucked investment into the United States from the early 1980s onwards. The downward pressure on commodity prices, coupled with the problems of 'third world' industries breaking into protected imperialist markets have made it impossible for Latin American and African countries to service, let alone repay their loans: they have been caught in a spiral of debt. The trend towards the expansion of the third world economies has collapsed, to be replaced with IMF austerity packages.
The 'newly industrialising countries' of Asia – Singapore, Taiwan, Korea, Hong Kong – are partial exceptions – and even their growth has sharply slowed down. The fundamental characteristic of imperialism – in which the less developed economies sink ever deeper into poverty to pay interest charges which fund the profits of bankers in the 'first world' – is reasserting itself with a vengeance.
A question mark looms over this process. Will the deepening impoverishment of the masses in the semi-colonial countries spark off new revolutionary explosions? This question is fundamentally one of political leadership and perspective for the mass organisations of the oppressed: it cannot be answered merely by reference to the economic facts. The defeat in Nicaragua is part of a growing political offensive against the masses of the third world, spearheaded by the United States, but aided by the deepening 'peaceful coexistence' policies of Gorbachev, which played a fateful role in Nicaragua.
Any idea of an automatic, triumphant and uninterrupted upsurge by the people of the world's poor countries against imperialism has to be rejected. While in a whole series of countries there are massive revolts against imperialist oppression, there are formidable obstacles in the way of new revolutionary victories.
The collapse of Stalinism
Central to the hastening collapse of Stalinism, which involves all the post-capitalist states and the communist parties, is the stagnation and failure of the Soviet economy. At root, this is a crisis arising from the lack of dynamism or ability to innovate which paralyses the development of the bureaucratic command economy. Only the military sector partially escaped this, but only at the price of stripping the rest of the economy of much of its productive potential.
The lurch into 'deep stagnation' in the USSR was highlighted by the 1980s inflationary boom in the West. Living standards of part of the population in the West held up or improved. In the USSR it only stagnated. The microchip revolution was able to make some progress in the West; in the USSR it never got off the ground. Thus the gap in the productive potential of East and West has increased.
Socialists of course should have no illusions; the partial successes of Western capitalism were at the expense of the 40 million unemployed, the millions more excluded from the 'two-thirds society', and at the expense of the third world. Capitalism has not stabilised itself; but its dynamism far outstripped that of the bureaucratic economies.
Perestroika and glasnost are the response of the reform wing of the Soviet bureaucracy to this crisis. But the end of the Brezhnev doctrine has given the space to the masses of Eastern Europe to push through their political revolt. The consequence has been the dramatic collapse of Stalinist rule.
But this collapse takes place in a very difficult context from the viewpoint of the struggle for world socialism. The absence of any viable examples of socialist democracy in the real world have created a situation in which myths of capitalist prosperity and democracy have wide currency in Eastern Europe. There is a great danger that the revolt will lead to a restoration of capitalism. In particular if the reunification of Germany is achieved on a capitalist basis, the configuration of forces on a world scale will be transformed.
Capitalist competition
The modern nation state was born with capitalism; the integration of previously separate capitalist states with one another has only ever been permanently achieved by conquest. But in the face of the rise of Japanese and US economic power, there have been four decades of moves towards European integration. Before the events in Eastern Europe, it looked as if the world capitalist economy would soon revolve around three major blocs: Japan, dominating the four newly industrialised countries in Asia; the United States, with domination in Latin America; and Western Europe, trying to make openings to the East, but in which Germany and France would be the strongest nations.
The events in Eastern Europe have achieved a partial disruption of this schema. European economic integration may still proceed, but only under the absolute domination of Germany. Even in the unlikely event that German reunification were not achieved, West Germany would still be the main beneficiary of new economic links with the east. Although the costs of reunification will be high for West Germany, eventually it is bound to represent an immense increase in economic and political power. A united capitalist Germany would emerge on much more equal terms with the United States and Japan.
The configuration of the world system will of course also depend on whether a series of smaller capitalist states emerge in Eastern Europe and from the independence of a series of Soviet nationalities.
Development of the crisis
Now do the different elements of the new world situation fit together? If we look at it from the viewpoint of the prospects for world capitalism, then a number of things are clear. In the context of the emerging capitalist downturn, the long phase of capitalist recession has not been overcome. To boost profitability for another long boom would require a combination of the re-establishment of capitalism in one or a series of Eastern European countries with the continued process of assault against revolt in the third world, and major new defeats of the working class in the advanced capitalist countries. In other words, it requires world imperialism to launch a wide-ranging offensive and win enormous victories. There are considerable obstacles to such a process.
Since the 1974-5 recession there has been a protracted attack on the position of the working class in the advanced capitalist West.
Unemployment has gone well above 30 million, whole sectors of the population have been excluded from affluence, and trade union membership has declined. Since the late 1970s a wave of capitalist restructuring, based on a new 'post-fordist' model of accumulation, attempting to reduce the state sector and restructure industry has swept the West. Yet the basic strength of the working class still remains intact. Recession and slump, as the 1930s showed, have limited use in defeating the working class since they bring ruination to sections of capitalists as well.
Even defeats like that suffered by the miners in Britain have been partial. As events since last summer have shown, important sections of the working class are as willing as ever to wage a fight. No generalised defeat of the workers has occurred in any country, despite some bad setbacks. The worst setbacks have probably been the collapse of trade unionism in Spain (although there is a revival of struggle there) and the chronic inability of the US labour movement to stem the decline in the proportion of the working class which is trade unionised.
There is nothing in the new political situation which suggests sweeping new victories against the workers in the advanced capitalist countries will be easy to achieve.
The restoration of capitalism in Eastern Europe would of course provide the crucial link in any long-term project for restructuring the world system and creating a new boom. But it can only be done on the basis of utilising the East as a source of very cheap labour, and renovating industry around its most profitable sectors.
In other words, it requires – as the example of Poland shows – vicious austerity, bankruptcies and mass unemployment, and the removal of the state welfare systems. It could only happen on the basis of a defeat, crushing and prolonged, of the East European workers.
That is not exactly the future which the citizens of these countries opted for when they rose up against stalinism! The prospect is therefore one of a long struggle for the future of Eastern Europe. The masses will certainly resist austerity, against the attempts of both the West and the bureaucracy to impose it.
Imperialism appears, in the short term at least, to have a much freer hand in the 'third world'. Despite the grave dangers facing imperialism in South Africa as de Klerk tries to carry out a controlled transition to preserve capitalism as apartheid is at least partially dismantled, Gorbachev's policy of settling regional conflicts in a framework of peaceful coexistence with capitalism means opposing revolutionary struggle, and brings grave dangers for the workers and peasants.
The revolution in Central America has been set back a long way by the defeat in Nicaragua. The invasion of Panama and the renewed threats against Libya also show that the United States feels it has a much freer hand to intervene against its third world enemies. Now, without doubt, Fidel Castro and the Cuban revolution are the next major target in the US gunsights.
All this could have a profoundly demoralising effect on the masses in Latin America and lead to skepticism about the possibility of revolutionary social change. Setbacks on the political terrain include the defeat of the Lula-Workers Party electoral challenge in Brazil, and the continued stalemate in El Salvador which the FMLN offensive has not been able decisively to break.
In Asia, imperialist eyes are on the continued pressure from Pol Pot's forces against the government in Kampuchea – a direct result of Soviet pressure on the Vietnamese to withdraw from that country.
Centrality of European events
While these and other global flashpoints continue to highlight the struggle against imperialist domination, our whole analysis leads us to the conclusion that Europe – east and West – remains a decisive arena of this growing world crisis.
Without doubt the west European workers' movement is organisationally the most implanted and potentially the strongest in the world – much more so than in Japan, the United States, or the newly developing and unstable economies of Latin America. It is difficult to imagine a new 'boom' without big defeats being inflicted here. Eastern Europe will be the site of the battle over capitalist restoration, a battle which will take place in the context of a sharp increase in the integration and unity of the labour movement continent-wide. The working class in western Europe also has a role to play in this fight, as part of its own struggle against austerity and exploitation. The battle for a socialist future in Europe is crucial as we head towards the next century.
If major defeats on the working class are inflicted in the coming years world-wide, then the future is bleak. Only military competition between NATO and the Warsaw pact has prevented inter-imperialist competition turning into inter-imperialist wars in the last four decades.
Ecological catastrophe looms without international socialist planning. Millions of 'unprofitable' people will be 'closed down' by imperialism in the third world if a massive restructuring of world capitalism is allowed to occur.
There is nothing inevitable about socialism; and if it to be won, the socialist left internationally needs to renew its struggle on the basis of the essential twin themes of the next period – socialist democracy and anti-imperialist solidarity.
Anti-imperialist solidarity must not just be a general support for third world struggles, but a fight against capitalist restoration in Eastern Europe – both by raising the issues in our own labour movement and by helping to build a left wing in Eastern Europe which will fight against capitalist restoration. But in the face of the crisis in the Soviet Union, Eastern Europe and China, 'anti-imperialism' without a full commitment to socialist democracy and complete support to the workers' struggles in the Stalinist states will look like what it really always was – a political concession to Stalinism.